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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Greenspans Unbelievable Response to Financial Market Turmoil Due to Formation of His Bubbles

Stock-Markets / Liquidity Bubble Jan 30, 2008 - 07:09 PM GMT

By: Brian_Bloom

Stock-Markets

Best Financial Markets Analysis ArticleIf you read the media article below (Greenspan interview) in context of an understanding that “energy drives the economy”, and in context of the rising trendline of the PMO oscillator on the 30 year Bond Yield monthly chart, you have to agree with Greenspan.

The third quote highlighted is almost unbelievable in its disingenuousness. The man is either unbelievably stupid or unbelievably dishonest or unbelievably obtuse. But the emphasis is on the word “unbelievable”. How else could these bubbles have formed, Mr Greenspan? Please explain.


Since 1999, there has been a series of three “rising bottoms” in the PMO Oscillator of the long dated bond yield. This implies that market forces are grinding away in the background and are preventing the long bond yield from continuing along its downward trend. If the Fed keeps doggedly hacking away at the short end, it will “force” inflation. If it forces inflation, then the long bond yield will have nowhere to go but up. The debt mountain will implode.

On the other hand, if the Fed  finds itself unable to keep the velocity of money from slowing, then the forces of debt will grind away and the debt will compound. Eventually, the mountain of debt will grow so high that it will crush the economy.

The way I see it, this problem is insoluble by the Fed. It requires a new energy paradigm to act as a driver of world economic activity across a broader front.  To “replace” oil and coal is not going to be enough. We have to have a source of energy that will be available to even those who do not have access to energy today. If we fail in that task, the world economy will die of natural causes. It's a matter of time. No matter how hard one tries, one cannot fit a size 10 foot into a size 7 shoe. Just ask Cinderella's sisters. It can't be done. We need a bigger shoe, and it is a source of ongoing amazement to me that so few people have yet understood this simple fact – because it has been increasingly visible since 1975. By 1985 it was starkly evident to anyone who took the trouble to look.

Here is the evidence as it was available in 1985 (Source: New Scientist, May 1985)

There was never going to be enough natural gas to support a world population that was growing at 1.3% p.a.; and Nuclear has no capacity to support downstream economic activity in third world countries. The scientists are starting to argue “solar power”. They may be partially right but that cannot be the answer across the entire planet – in particular if we are heading for a period of global cooling which will be characterised by high cloud cover.

I would expect further upside gaps to manifest on the monthly gold chart as realisation finally dawns. That will be a reflection of what the psychologists refer to as “non directional behaviour” – like kicking a lawn mower when the motor won't start. It makes you feel better, but it doesn't help start the lawn mower's motor.

Source: decisionpoint.com

Cheers

Brian Bloom

http://www.breitbart.com /article.php?id=080130160243 .jlvg8jgj&show_article=1

Greenspan doubts Fed's ability to prevent recession

Jan 30 11:02 AM US/Eastern


Former Federal Reserve chief Alan Greenspan cast doubt on the ability of the central bank to prevent a US recession in an interview to appear on Thursday.

Greenspan told the German weekly Die Zeit that the Fed or political policies could "probably not" keep the world's biggest economy from sliding into recession, as financial markets widely expected the US central bank to cut its main lending rate.

" The influences of the global economy today are stronger than almost any monetary or budgetary response ," the German-language weekly quoted Greenspan as saying.

Although he left the post of Fed chairman two years ago, Greenspan's opinions on the economy are still sought after.

"Real long-term interest rates have much more influence over the heart of economic activity than national decisions," he was quoted as adding.

"And central banks have less and less power to influence long term rates ."

The former Fed chief put the chances of a US recession at 50 percent, but added: "We have few indications that would allow us to say we are already there."

Some analysts have said that low interest rates under Greenspan's watch were responsible in part for the US housing bubble that burst last year, and led to the current financial crisis.

Die Zeit quoted him as saying he found it hard to understand that "the Federal Reserve policy had somehow allowed housing and stock prices to rise ."

Fallout from the crisis, which began with a meltdown of the US market for high-risk, or subprime, mortgages, continues to rock international financial markets and now threatens the US economy with a recession.

For Greenspan however, the turmoil was "entirely the result of market forces at a global level."

The Fed's Open Market Committee (FOMC) was to announce its decision on US lending rates later on Wednesday.

It surprised markets last week by slashing the base Fed funds rate by three quarters of a percentage point to 3.50 percent, but it is widely expected to follow through with another cut to 3.0 percent.

By Brian Bloom
www.beyondneanderthal.com

Since 1987, when Brian Bloom became involved in the Venture Capital Industry, he has been constantly on the lookout for alternative energy technologies to replace fossil fuels. He has recently completed the manuscript of a novel entitled Beyond Neanderthal which he is targeting to publish by end March 2008.

The novel has been drafted on three levels: As a vehicle for communication it tells the light hearted, romantic story of four heroes in search of alternative energy technologies which can fully replace Neanderthal Fire. On that level, its storyline and language have been crafted to be understood and enjoyed by everyone with a high school education.  The second level of the novel explores the intricacies of the processes involved and stimulates thinking about their development. None of the three new energy technologies which it introduces is yet on commercial radar. Gold, the element , (Au) will power one of them. On the third level, it examines why these technologies have not yet been commerci alised. The answer: We've got our priorities wrong.

Beyond Neanderthal also provides a roughly quantified strategic plan to commerci alise at least two of these technologies within a decade – across the planet.  In context of our incorrect priorities, this cannot be achieved by Private Enterprise. Tragically, Governments will not act unless there is pressure from voters. It is therefore necessary to generate a juggernaut tidal wave of that pressure. The cost will be ‘peppercorn' relative to what is being currently considered by some Governments. Together, these three technologies have the power to lift humanity to a new level of evolution. Within a decade, Carbon emissions will plummet but, as you will discover, they are an irrelevancy. Please register your interest to acquire a copy of this novel at www.beyondneanderthal.com . Please also inform all your friends and associates. The more people who read the novel, the greater will be the pressure for Governments to act.

Copyright © 2008 Brian Bloom - All Rights Reserved

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